Bloomberg analyst views SEC's Ethereum ETF silence as unfavorable

Bloomberg analyst views SEC's Ethereum ETF silence as unfavorable

Senior Bloomberg ETF analyst Eric Balchunas warns that the likelihood of an ETH ETF approval diminishes daily as the SEC continues its silence with potential fund issuers.

The United States Securities and Exchange Commission's silence on Ether exchange-traded funds (ETFs) with issuers is sending a clear message, and it's not one that bodes well for those anticipating Ether ETF approvals by May.

In a recent discussion with Cointelegraph, Bloomberg's seasoned ETF analyst, Eric Balchunas, decisively downgraded the likelihood of Ether ETF approval to a mere 35%.

Pointing to the conspicuous absence of any communication or feedback from the SEC to the issuers with just 73 days left until the final deadline, Balchunas emphasized that this lack of engagement is a troubling indicator.

"The SEC's silence speaks volumes. Without their feedback, issuers are unable to address any potential concerns or make necessary adjustments to their proposals. This stagnant state is far from encouraging," Balchunas asserted.

Moreover, Balchunas hinted at insider information suggesting a deliberate strategy by the SEC to withhold communication from prospective fund issuers.

In addition, Balchunas raised concerns regarding SEC Chair Gary Gensler's stance on Ether, highlighting Gensler's persistent classification of Ether as a security. Given Gensler's cautious approach and the fallout from previous ETF approvals and legal battles, Balchunas cast doubt on Gensler's willingness to greenlight an Ether ETF.

"Considering Gensler's stance and the political ramifications, it's doubtful he'd be eager to tackle another contentious approval process. The fact remains: Gensler views Ether through a security lens, and unless that changes, approval seems unlikely," Balchunas concluded confidently.

Something feels off

Balchunas confidently asserts that the trajectory of the Ether ETF process starkly contrasts with his experience in the Bitcoin ETF pursuit. While acknowledging his assessment as personal, he emphasizes its pivotal role in shaping his perspective. The culmination of sourcing, public documentation, and intuitive instincts fuel an increasingly bullish outlook, propelling the odds in favor of approval.

Nate Geraci, President of ETF Store, highlights the perplexity surrounding the SEC's decision to greenlight ETH futures ETFs in October, juxtaposed with the subsequent denial of spot products in May, lacking substantial explanation.

In a bold declaration, Matt Corva, General Counsel at Consensys, sees a potential denial of an ETH ETF as a strategic move beneficial in the long term, neutralizing political pressures and leveling the playing field for alternative coins.

While the meeting between Coinbase, Grayscale, and SEC officials on March 6 may have sparked optimism within the crypto industry, Balchunas underscores Scott Johnsson's robust thesis, cautioning against premature enthusiasm. Johnsson's insight on the meeting's focus on correlation analytics between ETH and BTC futures versus spot prices suggests approval isn't guaranteed, a sentiment shared by Balchunas.

Highlighting the significance of the U.S. presidential election on November 5, Balchunas elucidates how a change in leadership could influence SEC dynamics, potentially affecting the ETF outcome.

With unwavering confidence, Balchunas affirms that the approval of a spot Ether ETF is not a matter of if, but when. Despite uncertainty regarding timing, he remains steadfast in his belief that progress is inevitable as regulatory intricacies are gradually resolved.